The URL can be used to link to this page

Home My WebLink About2004 AML CITY OF COLUMBIA HEIGHTS, MINNESOTA AUDIT MANAGEMENT LETTER December 31,2004 Tautges Redpath, Ltd. Certified Public Accountants and Consultants To the Honorable Mayor and Members of the City Council City of Columbia Heights, Minnesota We have completed the 2004 audit of the financial statements of the City of Columbia Heights and have issued our report thereon. Our Independent Auditor's Report is included in the City's Comprehensive Annual Financial Report (CAFR). Other reports included in the CAFR are: · Independent Auditors' Report on Compliance with Minnesota Legal Compliance Audit Guide for Local Government · Independent Auditor's Report on Internal Control and Compliance · Single Audit Reports. This Management Report provides the City an independent review and analysis of City finances. We also issue a separate Management Report for the Economic Development Authority. Page 2 contains an Executive Summary of our recommendations with page references to the areas discussed. June 10, 2005 f/t11 ~4,- ~I c- r;J . HLB TAUTGES REDPATH, LTD. Certified Public Accountants 4810 White Bear Parkway White Bear Lake, Minnesota 55110 1303 South Frontage Road Suite 13 Hastings, Minnesota 55033 651 426 7000 651 426 5004 Fax 651 480 4990 651 426 5004 Fax www.hlbtr.com HLB Tautges Redpath, Ltd. is a member of . International, a world-wide organization of accounting firms and business advisors. City of Columbia Heights, Minnesota Audit Management Letter Report Summary REPORT SUMMARY Several reports are issued in conjunction with the audit. A very brief summary is as follows: Report Name Elements of Report Overview Required Reports Comprehensive Annual Financial . Financial statements . Unqualified ("clean") opinion Report (CAFR) . Footnotes on the Basic Financial . Supplemental information Statements Report on Compliance and Internal Results of testing . No compliance findings Control . Internal controls over financial . One reportable condition in reporting internal control . Compliance with laws, regulations, contracts and grants State Legal Compliance Report . Results of testing certain . Four compliance findings provisions of Minnesota Statutes Schedule of Expenditures of Required because City'sfederal . One compliance finding Federal Awards and Independent program expenditures exceed Auditor's Reports $500,000 (Federal Single Audit) . Compliance and internal control reports on federal programs . Schedule of federal expenditures and other required reports - City of Columbia Heights, M i n nesota Audit Management Letter Executive Summary EXECUTIVE SUMMARY A summary of our recommendations contained in this report is as follows: The City continues to experience a good property tax collection rate - 98% for 2004. Page 6 -. The General Fund balance increased $717,000 during 2004. The City budgeted a decrease of $42,000, however, revenues were greater than budget by $295,000 and expenditures were less than budget by $477,000. Page 15 The Library Fund balance at December 31, 2004 was not sufficient to fulfill the reserve requirement for working capital. The shortfall was $74,000. Page 19 We have issued a separate management report addressed to the EDA/HRA. Page 20 The City's Comprehensive Annual Financial Report received the Certificate of Achievement for Excellence in Financial Reporting. Page 40 We have a summary and recommendation of certain internal control matters. Page 41 - City of Columbia Heights, Minnesota Audit Management Letter Government-Wide Financial Statements ACCOUNT BALANCE ANALYSIS OF THE GOVERNMENT-WIDE FINANCIAL STATEMENTS~ The basic financial statements of the City of Columbia Heights are presented in Statements 1 through Statement 9 of the 2004 Comprehensive Annual Financial Report. The following comments relate to these Financial Statements. Summary of Financial Activitv A summary of financial activity for 2004 is as follows: Revenue Expenditures Increase in Fund Balance! Cash and Olher and Ol her Transfer> Fund Balance! Nel Assets Ba]ance CAFR Fund Snurees Uses (Nell Nel Assets 12131104 12131104 ~ General $8.147,812 $7,536.202 $105,268 $716.878 $4,]40,110 $3,895,759 88 Special Revenue: CommunilY Development Fund 3,725 419,722 444,807 28,810 111,354 123.825 lJO Cable Television 135,347 9,035 (109,330) 16,982 12,296 III Library 609,613 595.438 (JO,863) 3,312 15,845 44,606 112 D.A.R.E Program 50 4,834 9,000 4.216 27,185 27,475 113 Special Projects 26,819 26,819 36,995 61,164 114 C.H.A.S.E 2.299 (7,808) (5,509) 53,57'1 53,076 ]]5 Twenty-Fir>t Century Grant 67,532 58'()56 7,808 17,284 14,348 J2,317 ][6 Confiscated Property 6,875 7.637 (762) 14,337 14,337 117 Local Law Enforcement Block Grant 13,067 14,269 (1,202) 3,464 3,365 118 Juvenile Justice Grant 10,068 10,793 (725) ]20 Police Graols - Olher J.()43 1.043 121 Recrealion ContribUle<.! Pn~ects 39,247 7,835 (6,000) 25,412 ]24,130 124,130 122 Conlribuled Prnjects 1,938 2,890 (952) 23,622 23,622 123 Flex Benefit 10.334 6.746 3,588 41,243 46,953 124 IInusing and Redevelormenl AUlhority: Parkview Villa North 539.460 444,555 94,905 507 ,830 590,467 128 Park view Villa SOUlh 214.497 201.l79 13,318 ] 25,622 168.377 J29 Renlal Housing 2,472 2,606 (134) 53,290 52.874 130 EDA: Ec<>nomic Developmenl Auth<1Tity Admin 210,768 750 ( 222,(48) (12.630) 78,049 118,581 91 Euisness Revolving Lllan Fund 16,744 ]6.744 369,999 306,217 132 Anllka County CDBG 525.544 567 (525.544) (567) (29,636) 90 - I City of Columbia Heights, Minnesota Audit Management Letter Government-Wide Financial Statements Revenue Ellpemlitur~s I ner~~se in T'uml B,I,neel Cash and Other and Other Transfen; Fund Balancel Net A,sels Ilal,nce CAFR Fund Sources V,es (Nell Net Asscls I 213'1i(j4 121311114 ~ Debt Service: Shcfllcld TIF Redevelopment $53,550 $23,605 $ $29,945 ($434,473) $34,358 45 Tax Incremenl Bonds 794.227 13.647 (920,889) (140,309) 118.243 8U60 135 Capital Appreciation Bonds or 1990 1,953.872 956,089 1,686,214 2.683,997 2.683.997 2.666.721 44 Multi-Vse Redevelopment Plan 21,792 11 ,466 10,326 {36,(96) 135 T~x Increment Refunding Bonds or 20ll4A 35,979 544 35,435 35.435 35.435 135 G.O.lmpmvement I 999A 19,115 118,JI)9 50.342 (48,652) 584,944 580.737 135 G.O. ImpmvementlRevenuc 2003A 114,154 460,335 346,181 342.121 342.121 135 Capilal Project: MSA State Aid Streel 463.321 150,438 (304,806) 8.077 (136.821 ) 44 Capitallmpmvemenls General Government Buildings 117 ,456 60,50(J 177.956 3,373,534 3.347.694 45 C,pilal Equipment Replacement General Government 419.189 303,052 !OO.OOO 216,137 4.759.1 ]4 4.722.490 45 Capilallmpmvemenls PIR Fund 786.633 ] .446.726 (267,508) (927,601) 87.765 193,509 45 Capit,llmpmvemenl 5.068 373 65.050 69,745 730.031 129.915 141 Downtown P~rking Maintenance 25.258 7,383 (530.000) (512.125) 228.183 227,572 141 Capital Sheffield Redevelopment (270,000) (270.000) 213.133 213.133 14] Capitallmpmvemenl Parks 88,541 7,293 6.125 87,373 1.0]3.178 955.595 14] Capitallmpmvemenl PVVS 25.544 (765,325) (739,781) 25.544 19,922 142 Capital Improvement Development 675,936 1.156,048 1,361,544 881,432 1,506.010 198,745 45 Infrastructure Replac~ment 6,94(J 87,224 52,176 (28,108) 144.598 51,463 142 Capital Equipment Fire 19,284 323.142 (303,858) 351,624 347.379 142 Capital Equipment Cable TV 11,153 11,153 3]7,479 292,702 142 Capilal Building Libmry 200.000 ] 98,397 143 TIF District #2 53 (53) (2,296) 143 TIF MC<Jtmnic 123,615 45,756 76,859 277.235 275,562 143 TlF Seatlered Site 26,295 1.045 25,250 10,132 17,033 143 TlF Transition Block 65,051 11,740 53,311 57,325 57.227 143 Enterprise: Waler 1,792,025 1,635,364 ( 134.434) 22,227 2,719,020 471.732 147 Sewer 1,132,580 1,207,227 (131.914) (206,561 ) 5.510,349 862,436 ]50 Refuse 1.313.945 1,285,725 (189,912) (161,692) 436.780 ] 87, III I 153 Storm Sewer 400,850 17],]24 (8,769) 220,967 563.785 1I9,466 156 Liquor 7,048,928 6,578,437 (212.062) 258,429 3.32] ,622 2.081,518 ]59 Internal Service: Cenlral Garage 516,756 3S0,295 (90.S00) 75.971 401.307 306,065 166 Data Pmeessing 1,076 243,936 299,143 56.283 665,638 751,635 ]69 lnsurance 605,883 293,566 312,317 ],113,343 1.026.082 ]72 Compensated Absences 16.658 599.624 175 Total $29,135,136 $25,868,718 $0 $3,266,418 $36,922, 1114 $27,061,774 - City of Columbia Heights, Minnesota Audit Management Letter Government-Wide Financial Statements Property Taxes Receivable Delinquent taxes receivable related to the general property tax levy inefeased from $84,462 at December 31, 2003 to $105,861 at December 31, 2004. Tax collections were 98% of the 2004 levy. A history of tax collections is presented in Table 5 of the Comprehensive Annual Financial Report. Tax Levies. Tax Rates and Tax Capacity A comparison of values for taxes payable 2003 and 2004 is as follows: 2003 2004 Market value $977,677,300 $1,072,678,600 Tax capacity values: Real estate $8,665,656 $9,511,823 Personal property 95,322 99,232 Subtotal 8,760,978 9,611,055 Fiscal disparity contribution (409,330) (379,508) Fiscal disparity distribution 2,111,495 2,267,401 Total $10,463,143 $11,498,948 Tax capacity rates 45.272 47.888 Tax levy $4,817 ,984 $5,447,260 - City of Columbia Heights, Minnesota Audit Management Letter Government-Wide Financial Statements Special Assessments Receivable Special assessments receivable consisted of the following amounts at December 31, 2003 and 2004: Description Delinquent Deferred Unremitted December 3] , 2003 2004 $28,642 $20,265 1,195,738 ],577,765 6,334 7,168 Increase (Decrease) ($8,377) 382,027 834 Totals $1,230,714 $1,605,198 $374,484 Delinquent special assessments receivable consist of amounts which have been spread for collection in 2004 and prior years but have not been collected at December 31, 20040 The City collected approximately 93% of the current assessments due in 2004. Deferred assessments receivable consist of the remaining balance of council adopted assessment rolls. These assessments are collectible at various terms and interest rates. Balance atJanuary 1,2004 Less 2004 principal levy Plus new assessment rolls Less prepayments $1,195,738 ( 138,338) 966,457 (466,100) Balance at December 31, 2004 $1,557,757 - City of Columbia Heights, Minnesota Audit Management Letter Government- Wide Financial Statements Interfund Receivables A schedule of activity of long term interfund loans is as follows: Balance New Payments Balance Fund with Payable at 12/31/03 Loans Principal Interest at 12/31/04 Sheffield TIF - 652 $471,061 $ $1,768 $23,553 $469,293 Scattered Site TIF - 652 18,801 11,835 940 6,966 EDA - 390 600,000 600,000 EDA - 420 800,000 800,000 Totals $489,862 $1,400,000 $13,603 $24,493 $1,876,259 The Sheffield TIF loan is authorized by Resolution 2003-5. The Scattered Site TIF loan is authorized by Resolution 2003-4. The EDA loan is authorized by Resolution 2004-60. - City of Columbia Heights, Minnesota Audit Management Letter General Fund GENERAL FUND The General Fund of the City is maintained to account for the current operating and capital outlay expenditures common to all cities. These basic services include (but are not limited to) public safety, public works, parks and recreation, and general government. State aids and property taxes account for approximately 83% of the total revenue of the General Fund. A history of General Fund revenue is as follows: General Fund - Sources of Revenue State Aid Property Taxes All Other Total Year Amount Percent Amount Percent Amount Percent Amount Percent 1996 $3,153,299 49% $2,403,017 37% $924,756 14% $6,481,072 100% 1997 3,333,615 49% 2,505,456 37% 1,006,133 15% 6,845,204 100% 1998 3,382,187 47% 2,662,288 37% 1,123,767 16% 7,168,242 100% 1999 3,448,758 48% 2,658,598 37% 1,026,541 14% 7,133,897 100% 2000 3,509,577 47% 2,737,854 37% 1,167,656 16% 7,415,087 100% 2001 3,577,318 47% 2,954,511 38% 1,148,842 15% 7,680,671 100% 2002 3,362,902 41% 3,534,854 44% 1,225,889 15% 8,123,645 100% 2003 2,811,870 38% 3,646,155 49% 967,382 13% 7,425,407 100% 2004 2,413,850 30% 4,336,802 53% 1,398,786 17% 8,149,438 100% - City of Columbia Heights, Minnesota Audit Management Letter General Fund State aids for the General Fund have consisted of the following amounts for the last two years: Increase Description 2003 2004 (Decrease) Local government aid $1,812,717 $1,453,141 ($359,576) MVHC 607,324 587,319 (20,005) Police aid 184,318 189,318 5,000 Fire aid 75,788 97,679 21,891 All other 131,723 86,393 (45,330) Totals $2,811,870 $2,413,850 ($398,020) A graph of General Fund revenue by source is as follows: $9.fXJ(l,(l1l1l $8,lKJIl.IlUO General Fund Revenue by Source $7,lKlU.fIUO $6.000,000 $5.000.000 $4,000.000 UOOO.OOO $2,000,000 $1.000,000 $0 20()() 200] 2002 20m 2004 - City of Columbia Heights, Minnesota Audit Management Letter General Fund Revenue and other financing sources of the General Fund for the past two years has been as follows: 2003 2004 Increase Description Amount Percent Amount Percent (Decrease) General property taxes $3,646,155 46.1% $4,336,802 50.4% $690,647 Licenses and permits 281,480 3.6% 506,319 5.9% 224,839 Intergovernmental revenue: State 2,811,870 35.6% 2,413,850 28.1% (398,020) Federal 9,478 0.1% ]7,956 0.2% 8,478 Other 42,999 0.5% 85,541 1.0% 42,542 Charges for services 407,914 5.2% 444,856 5.2% 36,942 Fines and forfeitures 140,378 1.8% 140,282 1.6% (96) Investment income 51,216 0.6% 171,181 2.0% 119,965 Other 33,917 0.4% 31,025 0.4% (2,892) Transfers 480,052 6.1% 456,634 5.3% (23,418) Tota] revenue and other financing sources $7,905,459 100.0% $8,604,446 100.0% $698,987 - City of Columbia Heights, Minnesota Audit Management Letter General Fund A chart of 2004 revenue by source is as follows: General Fund 2004 Revenue by Source Inlergovcmmcnlal 29.3% Property Taxes 50.4% - City of Columbia Heights, Minnesota Audit Management Letter General Fund Expenditures and other financing uses of the General Fund for the past two years were as follows: 2003 2004 Increase Amount Percent Amount Percent (Decrease) Expenditures: General government $1,532,974 19.2% $1,555,382 19.7% $22,408 Public safety 3,491,939 43.7% 3,462,092 43.9% (29,847) Public works 1,090,695 13.6% 1,247,704 ]5.8% 157,009 Parks and recreation 1,203,211 ]5.0% ] ,266,844 16.1 % 63,633 Contingencies 4,883 0.]% 2,180 0.0% (2,703) Transfers out: Data processing 50,000 0.6% 39,143 0.5% (] 0,857) Capital improvement - general 0.0% 6,5]6 0.1% 6,516 Capital improvement - parks 50,000 0.6% 6,]25 0.1% (43,875) Capital improvement - PIR ] 92,074 2.4% 0.0% (192,074) Capital improvement - general governmental building 80,000 1.0% 50,000 0.6% (30,000) Community development 250,000 3.1% 249,582 3.2% (418) Capital equipment replacement 50,000 0.6% 0.0% (50,000) Local law enforcement block grant 1,402 0.0% 0.0% (1,402) Juvenile justice grant 655 0.0% 0.0% (655) Total expenditures and other financing uses $7,997,833 100.0% $7,885,568 100.0% ($112,265) - City of Columbia Heights, Minnesota Audit Management Letter General Fund A chart of 2004 expenditures by function is as follows: General Fund i 2004 Expenditures j By Function I Public Wmks 15.8% Parks & Rccrealit>n 16.1% - City of Columbia Heights, Minnesota Audit Management Letter General Fund The fund balance of the General Fund at December 31,2004 was $4,140,110. During 2004, the fund balance of the General Fund increased by $716,878 as follows: Favorable (U nfavorable) Budget Actual Variance Revenues and transfers in: Property taxes $4,341,391 $4,336,802 ($4,589) Licenses and permits 323,100 506,319 183,219 Intergovernmental 2,425,719 2,517 ,347 91,628 Charges for services 497,250 444,856 (52,394 ) Fines and forfeitures 85,000 140,282 55,282 Investment income 164,321 171,181 6,860 Other 16,400 31,025 14,625 Transfers in 456,634 456,634 Total 8,309,815 8,604,446 294,631 Expenditures and transfers out: General government 1,686,769 1,555,382 131,387 Public safety 3,578,580 3,462,092 116,488 Public works 1,265,755 1,249,704 16,051 Parks and recreation 1,382,] 14 1,266,844 115,270 Contingencies 100,000 2,180 97,820 Transfers out 338,725 351,366 (12,641) Total 8,351,943 7,887,568 464,375 Net increase in fund balance ($42,128) $716,878 $759,006 - City of Columbia Heights, Minnesota Audit Management Letter General Fund The City's General Fund balance has been as follows for the past several years: Year Ended Increase December 31, Fund Balance (Decrease) 1993 $3,181,939 $256,073 1994 3,444,408 262,469 ]995 3,59] ,224 146,816 ]996 3,839,350 248,126 1997 4,060,594 221,244 1998 4,744,231 683,637 1999 5,015,965 271,734 2000 4,801,418 (214,547) 2001 3,897,376 (904,042) 2002 3,515,606 (381,770) 2003 3,423,232 (92,374) 2004 4,140,110 716,878 $6,000,000 Fund Balance $5,000,000 $1,000,000 $4,000,000 $3,000,000 $2,000,000 $0 1995 1996 1997 1998 1999 2000 200] 2002 2003 2004 - City of Columbia Heights, Minnesota Audit Management Letter General Fund Property taxes and state aids account for approximately 80% of the revenue of the General Fund. Property taxes and state aids are not received until July and December of each year (i.e., the second half of the year). As a result, the City is required to have sufficient reserves at the beginning of the year to fund operations of the first half of the year. As such, the City adopted resolution 95-40 establishing a General Fund cash flow reserve. This reserve is an amount equal to forty-five percent of the ensuing year's budgeted expenditures. A summary of General Fund designations is as follows: Fund Balance Component 2004 2003 Reserved for prepayments $23,302 $14,727 Designated for working capital 3,743,344 3,408,505 U ndesignated 373,464 Total fund balance - December 31 $4,140,110 $3,423,232 The amount of General Fund balance at December 31, 2004 was sufficient to fulfill the City's reserve goal. The reserve requirement is calculated as follows: 2005 budgeted expenditures Reserve requirement percentage Reserve requirement $8,318,543 x 45% $3,743,343 - City of Columbia Heights, Minnesota Audit Management Letter Special Revenue Funds SPECIAL REVENUE FUNDS The financial statements of the Special Revenue Funds are presented'ln Statements 13 through 39 of the 2004 Comprehensive Annual Financial Report. Special Revenue Funds are a classification of funds to account for revenues (and expenditures related thereto) segregated by City policy or Federal or State statutes for specific purposes. The City maintained the following Special Revenue Funds during 2003 and 2004: Fund Balance (Deficit) December 31, Increase Fund 2003 2004 (Decrease) Flex Benefits $37,655 $41,243 $3,588 Cable Television (4,686) 12,296 16,982 D.A.R.E. Program 22,969 27,185 4,216 Library 12,533 15,845 3,312 Community Development 82,544 111,354 28,810 PolicelFire Contingency Twenty-First Century Grant (2,936) 14,348 17,284 Juvenile Justice Grant 725 (725) Local Law Enforcement Block Grant 4,666 3,464 (1,202) Police Grants - Other Recreation Contributed Projects 98,718 124,130 25,412 Contributed Projects 24,574 23,622 (952) Special Projects 10,176 36,995 26,819 Confiscated Property 15,099 14,337 (762) C.H.A.S.E. 59,088 53,579 (5,509) Housing & Redevelopment Authority: Parkview Villa North 412,925 507,830 94,905 Parkview Villa South 112,304 125,622 13,318 Rental Housing 53,424 53,290 (134) Economic Development Authority: Business Revolving Loan Fund 353,255 369,999 16,744 Anoka County CDBG (29,069) (29,636) (567) E.D.A. Administration 90,679 78,049 (12,630) Totals $1,354,643 $1,583,552 $228,909 - City of Columbia Heights, M in nesota Audit Management Letter Special Revenue Funds Librarv Fund (240) This fund was established in 1993 to account for the library operations~ Prior to 1993, this activity had been accounted for in the General Fund. The primary revenue source of this fund is property taxes which are not received until the second-half of the year (July and December). Resolution 95-40 established a reserve for cash flow in an amount equal to forty- five percent of the ensuing year's budgeted expenditures. A summary of fund balance is as follows: December 31, 2003 2004 Designated for working capital Reserved for prepayments $9,671 2,862 $12,585 3,260 Total $12,533 $15,845 The fund balance at December 31, 2004 was not sufficient to fulfill the established reserve. A comparison of the required reserve and the fund balance available is as follows: $636,521 x 45% 286,434 (200,000) (12,585) $73,849 2005 budgeted expenditures Reserve requirement percentage Reserve requirement Balance available in Capital Equipment Replacement Fund Balance available in Library Fund Amount of fund balance under reserve requirement Effective December 31, 2002, the City transferred $200,000 out of this fund to a newly established Capital Equipment Replacement - Library Fund, - City of Columbia Heights, Minnesota Audit Management Letter Special Revenue Funds Community Development (201) This fund was established in 1996 to account for the financial activity~related to building inspections and community development administration. A summary of the financial activity of this fund is as follows: 2002 2003 2004 Revenues and transfers in: Investment income $1 ,547 $1,035 $3,725 Transfer from General Fund 250,000 250,000 249,582 Transfer from HRA 34,702 111,648 Transfer from EDA 222,648 Total 286,249 362,683 475,955 Expenditures and transfers out: Expenditures 297,632 277,160 419,722 Transfer out to General Fund (administrative charge) 11,826 16,226 27 ,423 Total 309,458 293,386 447,145 Net change in fund balance (23,209) 69,297 28,810 Fund balance - January 1 36,456 13,247 82,544 Fund balance - December 31 $13,247 $82,544 $111,354 HRA and EDA Comments and analysis of the HRA and EDA Funds are presented in a separate report addressed to the EDA. - City of Columbia Heights, Minnesota Audit Management Letter Debt Service Funds DEBT SERVICE FUNDS Debt Service Funds are a type of governmental fund to account for the accumulation of resources for the payment of interest and principal on debt (other than Proprietary Fund debt). A summary of bonded debt at December 31, 2004 is as follows: Balance At Final Original December 31 , Maturity Issue 2004 Date $1,985,000 $1,985,000 9/1/2009 2,399,721 (A) 9/112005 860,000 5 10,000 2/1/2010 1,332,828 1,263,623 211/2018 $3,758,623 Bond Issue G.O. Tax Increment Refunding Bonds of 2004A G.O. Tax Increment Capital Appreciation Bonds of 1990 G.O. Improvement Bonds of 1999A G.O. Improvement Bonds of2003A Total (AlTo be paid on 911105 with proceeds of2004A Bonds. All tax increments are receipted into the Tax Increment Bonds Fund (376) and subsequently transferred out to the Debt Service Funds as debt payments are made. - City of Columbia Heights, Minnesota Audit Management Letter Capital Project Funds CAPITAL PROJECT FUNDS The fund balances (deficits) of the Capital Project Funds were as follows at December 31, 2003 and 2004: Fund Municipal State Aid 212/402 Sheffield TIF Redevelopment 410 Capital Improvement Development 420 Capital Improvement 401/390 Downtown Parking Maintenance 405/290 TIF District #2 407 TIF Medtronic 378 TIF Scattered Site 379/386 TIF Transition Block 389 Capital Sheffield Redevelopment 410 Capital Improvement General Government Buildings 411 Capital Improvement Parks 412 EDA Capital Improvement PVVS 414 Capital Improvement Projects 415 Infrastructure Replacement 430 Capital Equipment Replacement 431 Capital Equipment Fire 439 Capital Equipment Cable TV 440 Capital Building Library 450 Totals Fund Balance (Deficit) December 31 , 2003 ($] 44,898) (464,418) 624,578 660,286 740,308 (2,243) 200,377 (15,118) 4,014 483,133 3,195,578 925,805 765,325 1,015,366 172,706 4,542,977 655,482 306,326 200,000 $13,865,584 2004 ($136,821 ) (434,473) 1,506,010 730,031 228,183 (2,296) 277 ,236 10,132 57,325 213,133 3,373,534 1,013,178 25,544 87,765 144,598 4,759,114 351,624 317,479 200,000 $12,721,296 Increase (Decrease) $8,077 29,945 881,432 69,745 (512,125) (53) 76,859 25,250 53,311 (270,000) 177 ,956 87,373 (739,781) (927,601) (28,108) 216,137 (303,858) 11,153 ($1,144,288) - City of Columbia Heights, Minnesota Audit Management Letter Capital Project Funds Municipal State Aid (212/402) This fund was established to account for MSA maintenance and construction allotments. For the past three years, the fund balance of this fund consisted of the following: December 31, Account 2002 2003 2004 Maintenance $71,094 $1,626 $79,807 Construction (796,798) (146,524) (216,628) Total ($725,704) ($144,898) ($136,821) - City of Columbia Heights, M i n nesota Audit Management Letter CapimlProjectFunds A summary of 2004 activity is as follows: Maintenance Construction Total Revenue: MSA $193,321 $270,000 $463,321 Expenditures: Personal services 40,718 2,900 43,618 Supplies 8,428 8,428 Other services and charges 24,288 24,288 Capital outlay 6,900 67,204 74,104 Transfers out: Fund 401 29,461 29,461 Fund 415 5,345 270,000 275,345 Total expenditures 115,140 340,104 455,244 Net change in fund balance 78,181 (70,104 ) 8,077 Fund balance - January 1 1,626 (146,524 ) ( 144,898) Fund balance - December 31 $79,807 ($216,628) ($136,821 ) - City of Columbia Heights, Minnesota Audit Management Letter CapftalProjectFunds Capital Improvement General Government Buildin2s (411) A summary of financial activity is as follows: 2002 2003 2004 Revenue: Investment income $104,138 $64,542 $117,456 State grant 10,000 Miscellaneous 12,005 Transfer from General Fund ] ,190,052 80,000 Transfer from Garage Fund 60,500 60,500 60,500 Transfer from Energy Management Fund 107,646 Total revenue 1,484,341 205,042 177,956 Expenditures: Project costs 20,778 489 Net change in fund balance ] ,463,563 204,553 177,956 Fund balance - January 1 1,527,462 2,991,025 3,195,578 Fund balance - December 31 $2,991,025 $3,195,578 $3,373,534 During 2001, the City adopted Resolution 2001-84 which authorized the transfer of $1,400,000 from the General Fund to this fund. Pursuant to the resolution, these funds are "dedicated to future improvements to general government buildings." Also, the resolution requires a four-fifths vote to expend any unbudgeted, undesignated fund balance. - City of Columbia Heights, Minnesota Audit Management Letter Capital Project Funds EDA Capital Improvement PVVS (414) This fund was established in 2001 by Resolution 2001-84 to accountfi:)r monies dedicated for future improvement or replacement of the building. A summary of financed activity is as follows: 2002 2003 2004 Revenues: Investment income $46,215 $15,392 $25,544 Expendi tures: Transfer to CAB's of 1990 765,325 Net change in fund balance 46,215 15,392 (739,781) Fund balance - January 1 703,718 749,933 765,325 Fund balance - December 31 $749,933 $765,325 $25,544 The resolution establishing this fund requires a four-fifths vote to expend any unbudgeted, undesignated fund balance. The transfer was approved through Resolution 2004-82. - City of Columbia Heights, Minnesota Audit Management Letter Capital Project Funds Capital Improvements PIR (415) A summary of the activity of this fund is as follows: 2002 2003 2004 Financial sources: Special assessments $597,380 $564,351 $671 ,357 Intergovernmental - MSA 254,890 Contributions from other funds 322,320 Investment income 4,658 16,365 Bond proceeds 1,332,828 Transfers from General Fund 192,074 Transfers from Municipal State Aid Fund 98,498 275,345 Transfers from Infrastructure Fund 261,591 Other 80,774 48,523 98,911 Reclassification of prior year costs 445,254 333,950 Total financial sources 1,700,618 2,836,473 1,061,978 Financial uses: Transfer to Capital Improvements Development 30,000 Transfer to Debt Service Fund 70,721 43,613 510,677 Transfer to State Aid Construction Fund 458,293 Transfer to Infrastructure Replacement Fund 2,176 Issuance costs 10,330 Bond discount 5,998 Other 13,382 7,688 Project expenditures 1,398,459 1,103,065 1,439,038 Total financial uses 1,469,180 1,634,681 1,989,579 Net change in fund balance 231,438 1,201,792 (927,601) Fund balance (deficit) - January 1 (417,864) (186,426) 1,015,366 Fund balance (deficit) - December 31 ($186,426) $1,015,366 $87,765 - City of Columbia Heights, Minnesota Audit Management Letter Capiml Project Funds The projects accounted for in this fund are financed by the following sources: . Capital Equipment Replacement Fund . Water Capital Construction Fund . Sewer Capital Construction Fund . General Fund . Special assessments The financing provided by other City funds is basically a cash transfer from those funds. The financing provided by special assessments is not an immediate repayment. Special assessments are extended out over a period of up to fifteen years. The Capital hnprovement Projects Fund is therefore required to finance the special assessment receivables until they are collected. The amount of special assessments receivable at December 31,2004 was $1,609,198. - City of Columbia Heights, Minnesota Audit Management Letter CapftalProjectFunds A summary of the active projects in this fund is as follows: Pmit:L"1 Fl1mJiJ]{) Hl Dale pmjl.,{:1 PmiL"l'1 Cmns Waler Sewer Storm Sewer Funding Prim Bond MSA InrraSlrUl.:turc SUllC Aid Capilal Capital Ci3pHal General E.xce......'il Proil,.'t;l ~ ~ ~ ^sscssmcms I'rrx:cl.'\ls ~ Comaruclinn Rcpl31.:cmcm Maintenance Cnnslnlclion Conslrm:Lion Construction ~ ~ (Deficiency) 0202 0210 02,0 0251 0301 0302 0305 0306 0310 0311 0350 0401 534, ,.045 5.:145 5,:145 0402 1.241Jl42 59.286 1,300328 823.792 82:1.792 (476536) 0404 17.896 17.896 (17,896) 0450 7,443 7.443 (7.44:1) 0,02 ~ ----=--- ~ ----=--- ----=--- ~ ~ ----=--- ~ ----=--- ~ ----=--- ----=--- ----:....- (16.649) $59.735 S].297.llo S1.350.851 S43Un S30.243 S222,713 S141.126 S85.OOO SI98,.,45 S:13.805 SI01.600 $109.996 S 1.350.851 :t~J9 8.006 11.545 2,500 2..,00 (9.045) 8.227 8.227 8.200 8.200 (27) 445 445 (445) 75,:;:19 58.045 133584 133.,84 133,.,84 1.181572 1.J 8 1572 709.750 270.000 118,289 13.498 10,029 1.181.572 12.078 4.01:1 ]6.0~1 (16,691) 4399 1512 5.911 (5.911) 117 2:1.4~3 23.610 (23,610) 768 768 (768) T"',I $1.439.0:17 $2.647.828 $4.086.865 $1.3~1.l99 S769.750 $40,94:1 $4~8.058 $l59,4]5 $~8,4~8 $]98,545 $33,805 $]01,600 $]20,025 $3.511,844 (S575.021) The City Council does not adopt project budgets or project financing allocations until a project is closed out. We recommend the City council approve project budgets at the time the projects are approved. - City of Columbia Heights, M i n nesota Audit Management Letter Enterprise Funds ENTERPRISE FUNDS Water Fund Operatin2 Account 601 A graph of the water operations is presented below: $1.9IXl.OOO $uml.OOO $1.7lXl.OOO $1.6ml,OOO $!.SIXl.OOll $1.4IlO.000 $1.3IXl.1I01l $1.200.0011 $1.1 00.000 $1,1100,0011 $900.0011 $800.()()O $7(lO.OOO $600.0011 $500,000 $400.000 $300.000 $2mJ.OOO $100,000 $0 2000 20lJl 2002 2003 2004 $1.900,000 $1.800,lX)() $1.700,IX)O $1.600,1)()O $1.500,000 $1.400,OIlO $1.300,000 $1.20().OOO $1, IIlO,lXlO $1.1100,000 $9110,(XlO $800,()(JI) $700,mJO $600,000 $500,000 $400,(X)() $300,000 $200,000 $100,000 $0 Water Utility Fund Revenue And Expenses Il!!lE!llllOlher Operating Expenses EEWater Purchases --Opcrdling Revenue The City of Columbia Heights purchases its water supply from the City of Minneapolis. However, the City does not have a current contract with the City of Minneapolis. As the above chart demonstrates, expenses of the water utility exceeded the revenue generated by water. We recommend the City continue to review rates and make changes as appropriate. - City of Columbia Heights, Minnesota Audit Management Letter Enterprise Funds Sewer Fund Operating Account 602 A graph of sewer operations is presented below. $] .300.lHIO $] ,200.000 $1.I 00.000 $].OOO.llOO $9IJll.llllO $80ll.llll0 $7110.lH10 $60ll.IHlll $500,000 $400,lHlO $300.lHIO $200.llll0 $IOO.OllO $0 2000 200] 2003 $1.300,IJ(Xl $1.200,IJ(Xl $1,lOll,OOll $ J.<KlO.OOll $900,000 $800,000 $700,000 $600.000 $500,llOO $4ll0,llOO $300,OllO $200,000 S!OO,OOO SO 2004 2002 Sewer Utility Fund Revenue and Expenses IE!!EJ Olher Operaling _~x~~~es --OJll'rating Revenue - City of Columbia Heights, M i n nesota Audit Management Letter Enterprise Funds Refuse Fund 603 A graph of refuse operations is presented below: $1.40(UII1Il $1300,()OO $J,200,OOO $I,IOIlJ)OO $1.Ollll,O(lIl $91111,llllll $gllll,llllll $7011,llOll $600,000 $5(Kl,llOll $4(KJ,OOO $3(KJ,01l1l $2011,OOO $100,000 $0 2000 200l 2003 $1.400,()()O $UOll.Ollll $1.200,000 $1.l011.111111 $1,111111,000 $9110.0(x) $8011,mIlJ $7110,1l1lO $61111,OmJ $500,mIlJ $4oo.mIlJ $300,000 $200,mIlJ $IllO,mIlJ $0 2004 2002 Refuse Utility I1i!!iim Operating Expenses ~ Operating Revenue - City of Columbia Heights, Minnesota Audit Management Letter Enterprise Funds Municipal LiQuor Fund 609 An analysis of 2004 activity is as follows: Top Valu Top Valu II HeighL' Liquor 2004 Total 20lH Total Amount Percent Amount Percent Amount PercenL Amount Percent Amounl Percent Opera Ling revenues $2.983.718 100.00% $2.633,603 100.00% $1,328.737 ] 00.00% $6.946.058 100.00% $6.934.572 100.00% CosL of goods sold 2.277 .454 76.33% 2,053.434 77.97% 987.443 ~ 5.318.33 J 76.57% 5.366.13 7 77.38% Gross margin 706,264 23.67% 580,169 22.03% 341,294 25.69% 1.627.727 23.437r. 1.568,435 22.620/" Other operaling expenses 566.723 18.99% 435,357 16.53% 254.854 19.18% 1.256.934 18.10% 1.236,163 17.83% NeL income from operations $139,54] 4.68% $]44,812 5.50% $86.440 6.51% $370.793 5. 34'1f, $332.272 4.79% Income from operations as a percent of total sales for the past sixteen years are scheduled below: Net Income From Operations %of Top Top Heights Total Year Valu Valu II Liquor Total Sales 1989 ----------m--S i te Informa ti 0 n -- --- ----------- $228,857 6.2% 1990 ________mn___ N ot A vailablem-m---------- 261,509 6.2% 1991 $297,378 $ - $97,341 394,719 8.2% 1992 246,739 - 100,907 347,646 7.2% 1993 148,150 (62,608) 103,476 189,018 3.6% 1994 146,350 5,902 10 1,483 253,735 4.6% 1995 141,235 37,749 115,595 294,579 5.2% 1996 124,471 80,885 150,649 356,005 5.9% 1997 68,002 92,250 151,023 311,275 5.1% 1998 151,974 123,436 181,752 457,162 7.2% 1999 146,576 130,763 226,116 503,455 7.5% 2000 152,630 105,749 128,389 386,768 6.0% 2001 183,202 108,788 167,587 459,577 6.7% 2002 159,242 161,358 175,799 496,399 7.2% 2003 30,672 165,891 135,709 332,272 4.8% 2004 139,541 144,812 86,440 370,793 7.0% As shown above, liquor operations have been an important revenue source for the City. - City of Columbia Heights, Minnesota Audit Management Letter Enterprise Funds Comparison With Other Municipal Liquor Stores The Office of the State Auditor (OSA) annually publishes "An Analysis of Minnesota Municipal Liquor Store Operations." The most recent report available is for 2003. The following analysis compares Columbia Heights' liquor operations with those reported in the OSA report. There are nineteen cities in the metropolitan area that operate off-sale only operations. The City of Columbia Heights ranks fifth in sales among metro area cities behind Richfield, Lakeville, Eden Prairie and Edina. It should be noted that the following comparisons are strictly a comparison of amounts reported. There are a number of factors that affect operating results that are not included in this comparison. These factors include the mix of product sold and philosophy regarding sales techniques such as high volume/lower margin. - City of Columbia Heights, Minnesota Audit Management Letter Enterprise Funds Gross Margin Analysis Gross margin measures the sales less the direct cost of products sold. ~A comparison to state averages for Minnesota municipal off-sale operations is as follows: Cost Gross Margin State Sales of Sales Amount Percent Average(1) 1996 $6,011,907 $4,774,908 $1,236,999 20.6% 23.1% 1997 6,135,166 4,878,712 1,256,454 20.5% 22.7% 1998 6,367,689 5,009,923 1,357,766 21.3% 23.2% 1999 6,669,376 5,238,023 1,431,353 21.5% 23.6% 2000 6,425,021 5,051,575 1,373,446 21.4% 23.8% 2001 6,796,384 5,267,398 1,528,986 22.4% 24.0% 2002 6,857,307 5,254,598 1,602,709 23.3% 24.4% 2003 6,934,572 5,366,137 ] ,568,435 22.6% 23.9% 2004 6,946,058 5,318,331 ],627,727 23.4% Not A vailab]e (I)Source: Minnesota Office of the State Auditor - Metropolitan Area Off-Sale Operations - City of Columbia Heights, Minnesota Audit Management Letter Enterprise Funds Operatin~ Expenses Operating expenses for the past several years have been as follows: Percent of Sales Year Amount City State Avg. 1994 $788,424 14.3% 16.0% 1995 830,817 14.6% 16.8% 1996 880,994 14.7% 16.3% 1997 945,l79 15.4% 16.5% 1998 900,604 14.1% 16.1% 1999 927,898 13.9% 16.2% 2000 986,678 15.4% 16.5% 2001 1,069,409 15.7% 16.6% 2002 1,106,310 16.1% 16.2% 2003 1,236,163 17.8% 17.8% 2004 1,256,934 18.1% N/A - City of Columbia Heights, Minnesota Audit Management Letter Enterprise Funds Operating expenses for 2003 and 2004 were as follows: Increase 2004 2003 (Decrease) Personnel costs $812,588 $760,612 $51,976 Rent 207,085 209,742 (2,657) Utilities 41,731 42,622 (891) Credit card fees 59,648 53,829 5,819 Insurance 29,772 24,081 5,691 Advertising 15,373 14,504 869 All other 90,737 130,773 (40,036) Total $1,256,934 $1,236,163 $20,771 Net Income from Operations Net income for the past several years is as follows: Percent of Sales City State Year Amount City Average 1994 $253,735 4.6% 7.2% 1995 294,579 5.2% 6.8% 1996 356,005 5.9% 7.5% 1997 311,275 5.1% 6.9% 1998 457,162 7.2% 7.5% 1999 503,455 7.5% 7.5% 2000 386,768 6.0% 7.2% 2001 459,577 6.7% 7.3% 2002 496,399 7.2% 8.1% 2003 332,272 4.8% 6.1% 2004 370,793 5.3% Not Available - City of Columbia Heights, Minnesota Audit Management Letter Internal Service Funds INTERNAL SERVICE FUNDS Internal Service Funds are used to account for the financing on a cost reimbursement basis of goods or services provided by one department to another department within the City. During 2004, the City maintained the following Internal Service Funds: Fund Cash Balance December 31, 2003 2004 Central Garage Data Processing Insurance Compensated Absences $185,621 625,959 769,819 594,629 $306,065 751,635 1,026,082 599,624 Total $2,176,028 $2,683,406 - City of Columbia Heights, Minnesota Audit Management Letter Federal Single Audit and State Legal Compliance Audit FEDERAL SINGLE AUDIT AND STATE LEGAL COMPLIANCE AUDIT --~ We performed a federal single audit covering federal programs and a State Legal Compliance Audit of the City (including the EDA) and have issued our reports thereon. The Single Audit Report includes findings on EDA programs and can be located in the City's 2004 Comprehensive Annual Financial Report. - City of Columbia Heights, Minnesota Audit Management Letter Certificate of Achievement CERTIFICATE OF ACHIEVEMENT FOR EXCELLENCE IN FINANCIAL REPORTING The City submits the Comprehensive Annual Financial Report to the Government Finance Officers Association of the United States and Canada (GFOA) for a review. The program is a review of all facets of financial reporting for disclosure, clarity and consistency with national reporting standards. The City received the award for each year since 1990. We commend the City for this achievement. - City of Columbia Heights, Minnesota Audit Management Lette r Internal Control Matters INTERNAL CONTROL MATTERS During our audit for the year ended December 31, 2004, we noted the following internal control matters: Special Assessments In 2004, the City adopted Resolution 2004-63, adopting assessments for project 0402. The resolution did not include an amount of the assessment roll adopted. Additionally, the actual amount of the assessment roll did not agree with the amount included in the council packet letter. We recommend future resolutions adopting assessment rolls include the amount of the assessment roll by PIN number. Monthlv Review of Parkview Villa Bank Reconciliations In 2004, the City began contracting for the management of PVVN and PVVS. New checking accounts were established for PVVN and PVVS. These accounts are HRA accounts but are maintained by the management company. Although these accounts were opened in March 2004, the City finance department did not request copies of the bank statements and bank reconciliations until the end of 2004. Therefore City staff were not able to review and provide oversight of this activity. Federal Grant Expenditure Reimbursements In 2004, the City received funds for administrative expenditures under the Capital Funds Program (CFP) from the Federal Department of Housing and Urban Development. However, the supporting documentation for certain expenditures is unclear and does not directly tie to the CFP requests for reimbursement. This occurred during the assistant finance director transition period. We recommend the City maintain specific documentation that ties directly to Federal reimbursement requests. - City of Columbia Heights, Minnesota Audit Management Letter Internal Control Matters The following is the status of internal control comments identified during the 2003 audit. Prior Year.Coimnent Soecial Assessments. In 2003, the amount of special assessments certified to the county differed from the amount approved by the City council by approximately $900. When presenting the special assessments to the council, the City does not specify the individual amount due by pin number. We recommend the City lists the special assessments presented before the council by amount per pin number in order to prevent a variance between amount authorized by council and amount certified to the count . Public Puroose Exoenditures. In 2003, the City paid for catering and door prizes for an employee holiday party. It is the Minnesota attorney general's opinion that the city should "refrain from paying for holiday parties or other employee social events." We recommend the City consider creating a public purpose expenditure policy to determine allowable Cit ex enditures. Rental Revenue. In 2002, the City received overpayments for a tower rental revenue lease from Sprint PCS. As of December 31, 2003, the City has not credited the overpayments to be recognized as rental revenue to City. We recommend the City reco nize the revenue accordin 1 . Improve Recreation Revenue Documentation. We noted the City does not maintain an audit trail regarding recreation revenue. Currently, documentation is not maintained that provides for verifying the completeness of recreation revenue. We suggest the Recreation Department improve cash receipting procedures which would include use of the cash register, require the issuance of a receipt to the customer and require reconciliation of class rosters to recei ts. Status Remains a finding for 2004. City adopted by resolution a policy in 2005. (2005- 21) This was resolved in 2004. Remains a finding for 2004. In 2003 the City began to track receipts through the use of a cash register. However receipts are not reconciled to class rosters. We recommend that receipts be reconciled with class rosters. - City of Columbia Heights, Minnesota Audit Management Letter Internal Control Matters Prior Year Comment Federal Grant EXDenditure Reimbursements. In 2003, the City received funds for administrative expenditures under the Capital Funds Program (CFP) from the Federal Department of Housing and Urban Development. However, the supporting documentation for the administrative expenditures is unclear and does not directly tie to the CFP requests for reimbursement. There is no documentation to support allocation of payroll to PVVS and PVVN. We recommend the City maintain specific documentation that ties directly to Federal reimbursement re uests. TIF Bond Arbitrage. In 2003, the City received notice that the TIF 1990 Bonds, Series A may not have been fully expended within the designated time restrictions. We recommend the City consider the impact of the otential bond arbitra e. Status Remains a finding for 2004. To be resolved July/August 2005 - HLB Tautges Redpath, Ltd. Certified Public Accountants and Consultants To the Board of Commissioners Columbia Heights Economic Development Authority Columbia Heights, Minnesota 55421 In conjunction with our audit of the City's financial statements, we have prepared this report to assist the EDA board in analyzing the financial activity of the EDA. Economic Development Authoritv The EDA was established in January 1996. The EDA is a separate legal entity from the City, however, because the Mayor and City Councilmembers comprise the majority of the EDA's governing board, the EDA is reported in the City's financial statements using the blended method. Additionally, the EDA assumed oversight responsibility for the HRA. The EDA and HRA financial statements are included as Special Revenue Funds of the City's CAFR. 4810 White Bear Parkway White Bear Lake, Minnesota 55110 1303 South Frontage Road Suite 13 Hastings, Minnesota 55033 651 4267000 651 426 5004 Fax 651 480 4990 651 426 5004 Fax www.hlbtr.com HLB Tautges Redpath, Ltd. is a member of . International, a world-wide organization of accounting firms and business advisors. Columbia Heights Economic Development Authority Audit Management Letter The transition of the funds of the HRA to the EDA is illustrated below: Before After BRA EDA BRA General Fund General Section 8 Fund Rental Housing Anoka County .., Anoka County CDBG CDBG Parkview Parkview Villa .., Villa North North Parkview Parkview Villa .., Villa South South Multi-Use Closed to Redevelopment ~ City TIF Debt .. Plan Service Fund EDA Administration - Columbia Heights Economic Development Authority Audit Management Letter Condensed balance sheets for the HRA and EDA for 2004 and 2003 are as follows: EDA FUNDS HRA FUNDS Business Anoka Parkview Parkview Revolving EDA County Villa Villa Rental 2004 2003 Loan Admin. CDBG North South Housing Total Tota] Assets Cash and investments $306,217 $1] 8,581 $ $590,467 $]68,377 $52,874 $],236,516 $],]4],620 Other assets 67,402 1,403,629 910,405 19,219 3.210 416 2,404,281 474,293 Total assets $373,6]9 $1,522,210 $9]0,405 $609,686 $171,587 $53,290 $3,640,797 $1,6]5,9]3 Liabilities and Fund Balance Liabi]ities - in total $3,620 $1,444,]6] $940,04 ] $]0],856 $45,965 $ $2,535,643 $622,395 Fund balance: Reserved 327,539 1,397,022 507,830 2,232,391 740,464 Unreserved 42,460 (] ,318,973) (29,636) ]25,622 53,290 (l ,127 ,237) 253,054 Tota] liabilities and fund balance $373,619 $] ,522,210 $910,405 $609,686 $]71,587 $53,290 $3,640,797 $],6]5,9]3 Reserved fund balances generally indicate that these funds are either externally restricted as to their use, or are not available for current expenditure. Unreserved fund balances include amounts that may be designated internally by the EDA. - I Columbia Heights Economic Development Authority Audit Management Letter Business Loan Revolvinl! Fund (299) A comparison of the financial activity of this fund for 2002, 2003 and 2004 is as follows: 2002 2003 2004 Revenues: Taxes $98,241 $97,076 $ Intergovernmental revenue 12,944 12,460 Fees/program revenue 12,542 20,781 3,192 Investment income 30,799 6,358 13,552 Total revenues 154,526 136,675 16,744 Expenditures: Other services and charges 12 Revenues over expenditures 154,514 136,675 16,744 Other financing sources (uses): Transfer from EDA Anoka County CDBG 24,000 Transfer to Sheffield Redevelopment (77 ,000) Transfer to Community Development (34,702) (111,648) Transfer to Capital Improvement Development (185,000) Transfer to Section 8 (85,877) Total other financing sources (uses) (358,579) (111 ,648) 0 Net change in fund balance (204,065) 25,027 16,744 Fund balance - January 1 532,293 328,228 353,255 Fund balance - December 31 $328,228 $353,255 $369,999 This fund accounts for the Business Revolving Loan Fund (BRLF). Also, prior to 2004 this fund accounted for property tax levy for Sheffield Redevelopment. Beginning in 2004, the tax levy is accounted for in Fund 204 - EDA Administrative Fund. As shown above, this fund has a fund balance of $369,999. A portion of the fund balance ($306,426) relates to a loan to ACAAP. In prior years, the City received monies directly from CDBG and provided - Columbia Heights Economic Development Authority Audit Management Letter a loan to ACAAP for the purchase of property. The $306,426 is the money that was repaid. The City is not aware of any restrictions on these remaining balances. A history of the fund balance is as follows: Increase Year Amount (Decrease) 1994 $268,307 $268,307 1995 53,521 (214,786) 1996 (15,447) (68,968) 1997 30,109 45,556 1998 37,907 7,798 1999 402,374 364,467 2000 478,760 76,386 2001 532,293 53,533 2002 328,228 (204,065) 2003 353,255 25,027 2004 369,999 16,744 This fund also accounts for revolving loans. A summary of the loan activity for 2004 is as follows: Balance Principal Balance 2004 Payor 12/31/2003 Payments 12/31/2004 Interest Barnick (Metro Assembling) $6,526 $2,925 $3,601 $267 F.C. Celtic, LLC 19 19 Totals $6,545 $2,925 $3,620 $267 - Columbia Heights Economic Development Authority Audit Management Letter Anoka County CDBG Fund (202) Financial activity of this fund for 2002, 2003 and 2004 is as follows: 2002 2003 2004 Revenues: Federal grant: Housing rehab - project 055 $55,855 $ $ Commercial revitalization - 030 87,935 Commercial revitalization - 130 239,393 Industrial redevelopment - 223 50,000 40th A venue improvements - 326 159,961 NEI demolition - 327 365,583 Total revenues 383, I 83 50,000 525,544 Expenditures: Personal services 3,204 Supplies 21 Other services and charges 85,613 3,752 567 Capital outlay 327,056 Total expenditures 415,894 3,752 567 Revenues over (under) expenditures (32,711) 46,248 524,977 Other financing sources (uses): Transfer to General Fund (5,913) Transfer to Capital Improvement Fund (50,000) (525,544) Total other financing sources (uses) (5,913) (50,000) (525,544) Net change in fund balance (38,624) (3,752) (567) Fund balance (deficit) - January 1 13,307 (25,317) (29,069) Fund balance (deficit) - December 31 ($25,317) ($29,069) ($29,636) - Columbia Heights Economic Development Authority Audit Management Letter At December 31, 2004, available CDBG balances are as follows: Project Number Project Year Available Balance $3l,985 327 2004 - Columbia Heights Economic Development Authority Audit Management Letter Parkview Villa North (PVVN) (203) The financial activity of this fund for 2002, 2003 and 2004 is as follows: 2002 2003 2004 Revenues: Federal grant: Operating subsidy $111 ,124 $84,667 $103,328 Capital grant 256,723 56,806 127,737 Rents 284,198 284,080 291,657 Investment income 28,170 27,485 15,888 Other 2,078 3,171 850 Total revenues 682,293 456,209 539,460 Expenditures: Personal services 9,111 32,055 17,064 Supplies 10,221 10,179 27,077 Other services and charges: ~anagementservices 104,009 113,654 112,873 Utilities 69,948 86,016 97,754 Repair and maintenance 29,495 38,112 29,489 PILOT 22,901 19,526 19,053 Insurance 24,024 31,076 29,022 All other 20,333 15,310 9,452 Capital outlay 248,336 55,824 102,771 Repayment of de-obligated funds 104,471 Total expenditures 538,378 506,223 444,555 Revenues over (under) expenditures 143,915 (50,014) 94,905 Other financing sources (uses): Transfers out (7,884) (11,454) Net change in fund balance 136,031 (61,468) 94,905 Fund balance - January I 338,362 474,393 412,925 Fund balance - December 31 $474,393 $412,925 $507,830 - Columbia Heights Economic Development Authority Audit Management Letter EDA Administration (204) This fund was established in 1996 to account for the financial activity associated with business development and community redevelopment projects in the City. A summary of the financial activity of this fund for 2002, 2003 and 2004 is as follows: 2002 2003 2004 Revenues: Taxes $119,834 $121,895 $197,418 Met Council - livable communities grant 209,650 Market value homestead credit 12,889 Reimbursement 4,210 Investment income 8,365 1,562 461 Total revenues 342,059 123,457 210,768 Expenditures: Other: Personal services 53,1 07 77,659 Supplies 5,457 1,030 Other services and charges 40,714 36,873 750 Loans and grants 209,650 Total expenditures 308,928 115,562 750 Revenues over expenditures 33,131 7,895 210,018 Other financing sources (uses): Transfers in 17,500 Transfers out: General fund (101) (7,884) (11,454) Community Development (201) (222,648) Capital Improvement Development (420) (100,000) Total other financing sources (uses) (90,384) (11,454) (222,648) Net change in fund balance (57,253) (3,559) (12,630) Fund balance - January 1 151,491 94,238 90,679 Fund balance - December 31 $94,238 $90,679 $78,049 - Columbia Heights Economic Development Authority Audit Management Letter Parkview Villa South (213) The financial activity of this fund for 2002, 2003 and 2004 is as follows: 2002 2003 2004 Revenues: Rents $191,944 $191,338 $207,562 Investment income 7,102 6,837 3,897 Other 1,342 3,912 3,038 Total revenues 200,388 202,087 214,497 Expenditures: Personal services 6,263 18,345 13,835 Supplies 6,359 3,418 7,574 Other services and charges: ~anagennentservices 51,913 56,507 57,300 Utilities 37,466 43,761 44,391 Repair and maintenance 19,229 25,612 40,4 77 PILOT 14,757 14,165 15,867 Insurance 11,833 15,537 12,930 All other 6,166 6,438 8,805 Capital outlay 9,089 Total expenditures 163,075 183,783 201,179 Revenues over expenditures 37,313 18,304 13,318 Other financing sources (uses): Transfers out - General (5,914) (8,590) Net change in fund balance 31,399 9,714 13,318 Fund balance - January 1 71,191 102,590 112,304 Fund balance - December 31 $102,590 $112,304 $125,622 During 2001, the EDA approved the establishment of the PVVS Capital Improvement Fund. This fund transferred $700,000 to the new PVVS Capital Improvement Fund as noted above. - Columbia Heights Economic Development Authority Audit Management Letter Rental Housing (235) This fund was established in 1996 to account for rental properties. Currently, the properties consist of one four-plex. A summary of the 2002, 2003 and 2004 financial activity is as follows: 2002 2003 2004 Revenues: Rents $16,450 $18,309 $400 Investment income 3,170 983 1,893 Other ]95 1,218 179 Total revenues 19,815 20,510 2,4 72 Expenditures: Other: Supplies 580 189 Other services and charges: Management services 1,380 1,380 Utilities 3,275 3,949 162 Repair and maintenance 1,964 2,062 1,701 PILOT 1,368 1,483 Insurance 1,063 1,380 All other 2,258 1,736 743 Capital outlay 152,708 Total expenditures 11,888 164,887 2,606 Revenues over (under) expenditures 7,927 (144,377) ( ] 34 ) Other financing sources (uses): Sale of land 150,421 Transfers in 8,323 Total other financing sources (uses) 0 158,744 0 Net change in fund balance 7,927 14,367 ( 134) Fund balance - January 1 31,130 39,057 53,424 Fund balance - December 31 $39,057 $53,424 $53,290 - Columbia Heights Economic Development Authority Audit Management Letter /It.~ ~ ~ t/J HLB TAUTGES REDPATH, LTD. White Bear Lake, Minnesota June 10,2005 --